IMO 2020 Sulphur Cap

IMO 2020 Sulphur Cap

As of 1st January, 2020, amendments to MARPOL have brought in a global sulphur cap of 0.50%. This regulatory change, although undoubtedly a positive one for the marine environment, nevertheless brings with it significant commercial, financial, legal and practical implications for owners and charterers alike.

In the lead-up to 2020, we have guided our Members as to how best to prepare for the transition, in both contractual and practical terms. Now that the new regulations are in force and the sulphur cap has become a reality, we are closely monitoring the emerging issues and will continue to provide guidance to Members to ensure a smooth transition into 2020.

In this dedicated section of our website, we offer a series of focused bulletins as well as resources and external industry guidance for the benefit of our Members.

Members are invited to sign up here to receive access to our regular updates.

Concerns that wash water discharged from open loop scrubbers may have harmful effects on local waters has led to many ports banning ships fitted with open-loop scrubbers or impose additional requirements relating to the discharge of wash water from such systems.

In the last edition of our Sulphur Series we foreshadowed some of the potential considerations relating to the use of scrubbers as a means of compliance with the MARPOL sulphur cap regulations. Now that scrubbers have come into common usage on many ships, we take an updated look at some of the legal and practical issues that have come to the fore. Find out more.

Are you ready for the carriage ban? As of 1st March, 2020, ships that were not fitted with scrubbers will not be permitted to carry on board fuel with sulphur content in excess of 0.50%, even if such fuel is not intended to be used. Any non-compliant fuel remaining on board will therefore need to be removed by 1st March.

As 1st January, 2020 looms large, with less than a month to go, many operators have started to use low sulphur fuels and, in line with industry predictions, issues are already being experienced in relation to the measurement of sulphur levels. In particular, it appears that purported “low sulphur” bunkers are regularly being found to be above the required 0.50% limit and discrepancies between test results for the same bunkers are being noted.

The first IMO 2020 compliant low sulphur fuels (“LSFO”) are starting to be trialled and appear on the market, but at present it is still really anyone’s guess as to how these new types of fuels will behave. Linked with this uncertainty are a myriad of potential concerns as to fuel quality and handling issues. We outline some practical and contractual precaution that can be taken to minimise risk and scope for disputes. Find out more....

On the 1st July 2019 the International Chamber of Shipping issued a document entitled 'Guidance to Shipping Companies and Crews on Preparing for Compliance with the 2020 Global Sulphur Cap’ for Ships’ Fuel Oil, in accordance with MARPOL Annex VI.

In response to industry-wide concerns as to whether there will be sufficient supplies of low sulphur fuel available after 2020, the IMO has made provisions in MARPOL. In the event of non-availability, ships are not required to deviate to find compliant fuel and may submit a fuel oil non-availability report, or “FONAR”. In this article we consider the extent of the protection afforded by these provisions and related contractual issues.

As the clock counts down ever closer to 2020, when ships will need to comply with the reduced bunker sulphur content cap of 0.5%, Members are advised to give careful thought to their charterparty provisions with a view to minimising scope for contractual disputes.

Last week at the 74th MEPC Summit, the IMO considered a number of matters relating to the 0.5% sulphur limit taking effect on 1st January, 2020 and provided welcome guidance and clarity on various key issues. We summarise some of the key takeaways in this Soundings update.

Under a time charter, the charterer is usually responsible for fuel and the owner for compliance with MARPOL whereas under a voyage charter an owner would generally be responsible for both. Whilst this should make the position more straightforward, one crucial question will be how best to mitigate the potential impact of volatile fuel prices linked to 2020.